I.T.O., Ward - 30(4)/Kolkata, Kolkata V. Smt. Rita Singh, Kolkata

ITA 2463/KOL/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5303 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Assessee Lawyers: S JHAJHARIA
• Keywords: Principle of natural justice; Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2463/KOL/2013 ( / ASSESSMENT YEAR: 2009-10) ITO, WARD-30(4), KOLKATA VS. SMT. RITA SINGH SHYAM KUNJ, 14/1, HINDUSTAN ROAD(SOUTH), KOLKATA-700068. ./ ./PAN/GIR NO. : AKUPS 5458 E (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI SHANKAR HALDER, JCIT, SR. DR RESPONDENT BY :SHRI S. J HAJHARIA, FCA / DATE OF HEARING : 12/03/2019 /DATE OF PRONOUNCEMENT : 15/05/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE , PERTAIN ING TO ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST AN ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-XIV, KOLKATA WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 30.12.2011. 2.THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THA T GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PERSONS HAS NOT BEEN ESTABLISHE D IN THE CASE OF CASH DEPOSITS OF RS. 1,28,18,125/- IN THE BANK A/C OF ASSESSEE. SMT. RITA SINGH ITA NO.2463/KOL/2013 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 2 22 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT A SSESSEE COULD NOT ESTABLISH THE GENUINENESS OF HER CLAIM OF HAVING OPENING CASH BAL ANCE OF RS. 31.28,125/-. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS RIGHT IN LAW AS WELL AS ON FACTS IN NOT GIVING OPPORTUNITY T O THE A.O TO VERIFY NEW DOCUMENTS LIKE LOAN CONFIRMATION OF M/S SR EXIM PRO DUCED BEFORE HIM DURING APPELLATE PROCEEDINGS. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, M ODIFY, DELETE OR INCLUDE ANY OF THE GROUNDS OF APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M.K.S. AROMATICS WHICH IS ENGAGED IN THE BUSINESS OF TRADI NG IN CHEMICAL, ESSENTIAL OILS, AROMATICS AND MENTHOL CRYSTALS. THE ASSESSEE HAS C ONTENDED THAT A SUM OF RS. 31,28,125/- WAS THE OPENING CASH BALANCE IN ITS HAN D AND A SUM OF RS. 90,00,000/- WAS RECEIVED FROM-VARIOUS AGRICULTURISTS ON A NUMBE R OF DATES. IT WAS CONTENDED THAT THE APPELLANT HAD FURNISHED THE NAMES AND ADDR ESSES OF THE PARTIES. IT WAS FURTHER CONTENDED THAT THE A.O. FAILED TO VERIFY TH E FACTS AND THE ADDITION WAS MADE. THE ASSESSEE FURTHER SUBMITTED THAT EVEN IF THE CONTENTION OF THE A.O. IS ACCEPTED, THEN ALSO THE PRINCIPLE OF PEAK CREDIT NE EDS TO BE APPLIED IN ITS CASE AND HENCE THE ADDITION SHOULD BE RESTRICTED ONLY TO THE AMOUNT OF PEAK CREDIT OF ALL THE TRANSACTIONS IN ITS BOOKS. IT WAS CONTENDED THAT TH E CASH BOOK WAS PRODUCED BEFORE THE ASSESSING OFFICER AND THE BANK STATEMENTS WERE ALSO SUBMITTED BY THE APPELLANT BEFORE THE A.O. IT WAS FURTHER CONTENDED THAT ALL T HE BANK STATEMENTS APPEARING IN THE BALANCE SHEET OF ITS PROPRIETORSHIP FIRM AS WEL L AS IN ITS INDIVIDUAL BALANCE SHEET WERE PRODUCED BEFORE THE A.O. ALONG WITH CASH BOOK. THE LEARNED A/R OF THE APPELLANT EMPHASIZED THE FACT THAT THE OPENING CASH IN HAND OF RS. 31,28,125/- COULD NOT LEGALLY BE ADDED IN THE CURRENT ASSESSMEN T YEAR AS IT PERTAINS TO EARLIER YEAR. IT WAS FURTHER CONTENDED THAT THE SUM -OF RS. 90,00,000/- WAS RECEIVED BY THE APPELLANT IN CASH FROM 10 (TEN) PERSONS WHOSE NAMES AND ADDRESSES WERE FULLY SUBMITTED TO THE A.O. AND THEIR IDENTITIES WERE ALS O PROVED. BESIDES, IT WAS SUBMITTED THAT DEBIT ENTRY OF RS. 3,00,000/- BEING WITHDRAWALS FROM BANKS WAS SATISFACTORILY EXPLAINED AS THE SAME WAS OUT OF THE MONEY DEPOSITED IN THE BANK ACCOUNTS OF THE APPELLANT. HOWEVER, THE ASSESSING O FFICER REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE OPENING CASH IN H AND AS CLAIMED BY THE ASSESSEE SMT. RITA SINGH ITA NO.2463/KOL/2013 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 3 33 3 AT RS. 31,28,125/- AND CASH RECEIVED FROM THE PARTI ES AT RS. 93,90,000/- AS WELL AS DEBIT ENTRY OF RS. 3,00,000/- CLAIMING TO BE WITHD RAWAL FROM BANKS TO SANCTIFY THE CASH DEPOSIT IN BANK ACCOUNT IS NOT PROPER AND JUST IFIED AND ITS WAS FABRICATED AND AN AFTERTHOUGHT EVENT, THEREFORE ASSESSING OFFICER CONSIDERED ALL OF THESE AS UNEXPLAINED INCOME AND MADE ADDITION OF RS. 1,28,18 ,175/- (RS. 31,28,125 + RS. 93,90,000 + RS. 3,00,000). 4. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRM THE PEAK BALANCE OF THE BANK ACCOUNT AS AN ADDITION OBSERVING THE FOLLOWING: 5.1. HAVING CONSIDERED THE APPELLANTS ALTERNATE G ROUND IN GROUND NO.3 OF THE APPEAL, IT IS SEEN THAT THE APPELLANT HAS MAINTAINE D BOOKS OF ACCOUNTS IN ITS PROPRIETORSHIP FIRM, M.K.S AROMATICS AND IT HAD ALS O SUBMITTED AN INDIVIDUAL BALANCE SHEET BEFORE THE A.O. IN THE COURSE OF ASSE SSMENT PROCEEDINGS. IN SUCH INDIVIDUAL BALANCE SHEET, THE OTHER BANK ACCOUNTS O F THE APPELLANT WERE DULY DISCLOSED AND ON PERUSAL OF THE SAID BALANCE SHEET, IT IS SEEN THAT THE APPELLANT HAD SHOWN A NUMBER OF TRANSACTIONS WHICH HAVE NEITH ER BEEN DISPUTED BY THE A.O. IN THE ASSESSMENT PROCEEDINGS NOR THE BOOKS OF ACCO UNTS HAVE BEEN REJECTED IN THIS REGARD BY THE ASSESSING OFFICER. IT HAS BEEN C ONTENDED BY THE LD. A/R OF THE APPELLANT THAT ALL THE ENTRIES IN THE INDIVIDUAL BA LANCE SHEET ARE ARISING OUT FROM THE SAID CASH BOOK AND THE BANK STATEMENTS DISCLOSE D ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. HA VING CONSIDERED THE CASH BOOK SUBMITTED BY THE APPELLANT AND THE INDIVIDUAL BALANCE SHEET, IT IS SEEN THAT THE CASH BOOK DULY REFLECTS ALL CASH WHICH HAVE BEE N WITHDRAWN FROM VARIOUS BANKS, MAINTAINED BY THE APPELLANT. FOR EXAMPLE, IT WAS SEEN THAT ON THE FOLLOWING DATES, THE SUMS WERE WITHDRAWN FROM THE B ANK AND DEPOSITED IN THE SAID CASH BOOK- SMT. RITA SINGH ITA NO.2463/KOL/2013 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 4 44 4 IT IS SEEN FROM THE AFORESAID CASH BOOK THAT IN THE SIMILAR FASHION THROUGHOUT THE YEAR, MONEY HAS BEEN DEPOSITED FROM SUCH CASH BOOK IN ITS OWN BANK ACCOUNT AND THEY HAVE BEEN WITHDRAWN FROM SUCH BANK ACCOUNT AND HAVE BEEN DEPOSITED IN THE CASH BOOK. IT IS NOT THE CASE OF THE A.O. THAT MONE Y HAS BEEN SPENT ELSEWHERE BY THE APPELLANT BUT HE FAILED TO EXAMINE THE CASH BOO K PROPERLY. THE A.O. FAILED TO APPRECIATE THE FACT THAT WHEN THE BANK ACCOUNT SHOW S BOTH DEPOSIT AND WITHDRAWAL OF CASH AND APPELLANT HAS DULY SHOWN THE SAME IN THE CASH BOOK, THE AO OUGHT TO EXAMINE SUCH CASH BOOK ANTI THE CONNECT ED TRANSACTION INSTEAD OF MERELY NOT CONSIDERING SUCH PERSONAL BALANCE SHEET OF THE APPELLANT. AO NEED TO CONSIDER THE CASH DEPOSIT AND WITHDRAWN VIS-A-VIS T HE DOCUMENTS AND / OR CASH BOOK AS FURNISHED / PRODUCED DURING THE ASSESSMENT PROCEEDING AND CONSIDER ONLY THE .PEAK CREDIT ARISING OUT OF SUCH TRANSACTION. H ENCE, THE APPELLANT'S CONTENTION IN SUCH RESPECT IS ACCEPTED SINCE WHILE MAKING ADDI TION U/S. 68 ON THE BASIS OF CASH DEPOSIT ONLY PEAK CREDIT NEEDS TO BE CONSIDERE D. IN THIS RESPECT, I HAVE ALSO OBSERVED THE PRINCIPLES DECIDED IN THE FOLLOWING JU DGMENTS: A) INCOME TAX OFFICER VS. MAHESHKUMAR JAYANTILAL VO RA ITAT, RAJKOT BENCH - (2004) 3 SOT 96 (RAJKOT) WHEREIN IT IS HELD THAT INCOME FROM UNDISCLOSED SOU RCES-CASH CREDITS-ADDITION- MODE OF -WHILE MAKING ADDITION UNDER S. 68 ON THE B ASIS OF CASH DEPOSITS, ONLY PEAK CREDITS SHOULD BE CONSIDERED - BY AGGREGATING ALL DEPOSITS, THEY TEND TO GET TAXED TWICE WHICH IS AGAINST THE PRINCIPLES OF TAXA TION. WHILE MAKING ADDITION UNDER S. 68 ON THE BASIS OF C ASH DEPOSITS, ONLY PEAK CREDITS SHOULD BE CONSIDERED. B) ASSISTANT COMMISSIONER OF INCOME TAX VS. KASHMIR TRADING COMPANY ITAT, JODHPUR BENCH - (2011) 141 TTJ (JD) 3 74 : (2011) 60 DTR 459 C) M.V.MATHEW VS. INCOME TAX OFFICER - ITAT, COCHI~ BENCH - (1993) 46 TTJ(COCH) 353 D) S.R. ENTERPRISE VS. INCOME TAX OFFICER - ITAT,AH MEDABAD 'SMC' BENCH -(2002) 77 TTJ (AHD) RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE A BOVE MENTIONED CASES, IT IS HELD THAT THE ADDITION TO THE EXTENT OF PEAK OF CREDITS OUGHT TO BE CONFIRMED. AS PER CASH BOOK, THE PEAK BALANCE IS RS. 38,77,125-/-. I HAVE ALREADY HELD THAT THE CASH BALANCE OF RS. 31,28,125/- CANNOT BE ADDED IN THE H ANDS OF THE ASSESSEE SINCE IT IS BROUGHT FORWARD FROM EARLIER YEAR, THE SANCTITY OF SUCH AMOUNT CANNOT BE DISTURBED IN THE A.Y 2008-09, AS SUCH, OUT OF SUCH PEAK BALANCE OF RS. 38,77,125/- , THE OPENING BALANCE OF RS. 31,28,125/- HAS TO BE REDUCED AND AS SUCH ONLY RS. 7,49,000/- CAN BE ADDED IN THE HANDS OF THE APPELLA NT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION TO RS. 7,49,000/-. ACCORDINGLY, THE APPELLANT GETS RELIEF OF RS. 1,20,69,125/-. 5. WE HAVE GONE THROUGH THE ORDER OF LD. CIT(A) AND NOTED THAT LD. CIT(A) HAS REACHED ON A LOGICAL CONCLUSION AND MADE ADDITION B ASED ON PEAK CREDIT THEORY. WE NOTE THAT BY AGGREGATING ALL DEPOSITS TEND TO GE T TAXED TWICE WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THEREFORE, ONLY P EAK CREDIT SHOULD BE CONSIDERED. SMT. RITA SINGH ITA NO.2463/KOL/2013 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 5 55 5 THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER, ON THIS ISSUE, IS HEREBY UPHELD AND GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15.05.2019. SD/- (S.S.GODARA) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED 15/05/2019 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-30(4), KOLKATA 2. SMT. RITA SINGH 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES